Insecurity of Employment and Work-Life Balance: From the viewpoint of compensating wage differentials

Author Name MORIKAWA Masayuki  (Vice President, RIETI)
Creation Date/NO. October 2010 10-E-052
Research Project Empirical Analysis of Japan's Labor Market: Policy Responses to Fertility Decline and Population Aging
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This paper presents survey-based evidence on the "fair" compensating wage differentials for insecurity of employment and lack of work-life balance (WLB). We present facts about individual perceptions of the desirable compensating differentials and then estimate the effects of working hours and wages on job satisfaction. The fair wage premiums for insecurity of employment and lack of WLB are both around 10% to 20%. The actual relative wages of nonstandard workers seem to be lower than those in the hedonic equilibrium. If "short-hour regular jobs" are characterized by both strong employment protection and WLB, the relative wage discount of 10% to 20% coincides with the average worker's perception of fairness. Working hours have a negative effect on job satisfaction and the wage level has a positive effect on job satisfaction, but the magnitudes of the effects differ between male and female workers. In order to achieve diversity of working styles, work schedule flexibility should be accompanied by a wage adjustment, which would contribute to the adoption and diffusion of WLB practices.